A token's price on its own tells you almost nothing. A coin at 0.05 dollars isn't necessarily cheap, and a coin at 500 dollars isn't necessarily expensive. To understand what you're really buying, you need to look at supply. Three numbers do most of the work: market cap, fully diluted valuation and the unlock schedule.

Market cap: what the market values today

Market cap = price × circulating supply.

Circulating supply is the number of tokens that can actually be traded right now. Market cap lets you compare projects fairly. A token at 0.05 dollars with 100 billion tokens in circulation is worth 5 billion dollars, which is far from cheap.

FDV: what it would be worth with every token out

Fully diluted valuation (FDV) = price × maximum supply.

Many newer tokens launch with only a small share of their supply in circulation. The rest belongs to the team, early investors and the treasury, and is released over time. FDV shows what the project would be worth at today's price if every token were already out.

Example: Token A trades at 1 dollar with 100 million tokens circulating and a maximum supply of 1 billion. Its market cap is 100 million dollars, but its FDV is 1 billion. For the price to simply hold steady as supply grows tenfold, the market would need to absorb a lot of new tokens.

Token unlocks: when new supply arrives

Locked tokens are released on a schedule called vesting. Two terms are worth knowing:

• Cliff: a period where nothing unlocks, followed by a large release all at once.

• Linear vesting: tokens unlock gradually, for example every month for two years.

Large unlocks can create selling pressure, especially when early investors bought at much lower prices and are sitting on big profits. That's why traders often watch unlock calendars closely in the days before a big release.

Supply models of the big coins

• $BTC has a hard cap of 21 million coins, and most of them are already mined. New supply is small and falls by half roughly every four years.

• $ETH has no fixed maximum supply. New Ether is issued to validators, while part of every transaction fee is burned, so the net supply depends on network activity.

• $BNB uses regular burns that permanently remove tokens from circulation, with the goal of gradually reducing total supply over time.

For these large coins, market cap and FDV are close together, so there's little hidden supply waiting to hit the market. For many newer tokens, the gap can be huge.

A quick checklist before you buy

Step 1: Compare market cap and FDV. If FDV is many times larger, a lot of supply is still locked.

Step 2: Check the unlock calendar. Are big releases coming in the next few weeks or months?

Step 3: See who holds the locked tokens. Team and investor unlocks usually carry more selling risk than community rewards.

Step 4: Look at daily trading volume. Can the market realistically absorb new supply?

Step 5: Read the project's official token documentation instead of relying on social media summaries.

The takeaway

A low price per token doesn't mean a bargain, and a strong chart can be undone by a big unlock. Spending five minutes on supply data before you buy is one of the easiest ways to avoid unpleasant surprises.

Do you check unlock schedules before buying a new token? Tell us in the comments.

This article is for educational purposes only and is not financial advice. Always do your own research.